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- Delivered Record Second Quarter Revenue of $2.2 Billion, Exceeding Expectations, and Representing a 5% Increase Compared to the Prior Year Fueled by 10% Growth at Coach<\/b><\/li>\n
- Drove 280 Basis Points of Gross Margin Expansion Versus Prior Year<\/b><\/li>\n
- Achieved Diluted EPS of $1.38 on a Reported Basis and Record non-GAAP Diluted EPS of $2.00, Growing Ahead of the Company\u2019s Outlook<\/b><\/li>\n
- Remain On Track to Return Over $2 Billion to Shareholders in Fiscal Year 2025<\/b><\/li>\n
- Raised Fiscal Year 2025 Revenue, Operating Margin, EPS, and Free Cash Flow Outlook<\/b><\/li>\n<\/ul>\n
Link<\/a> to Download Tapestry\u2019s Q2 Earnings Presentation, Including Brand Highlights<\/p>\n
NEW YORK–(BUSINESS WIRE<\/a>)–
\nTapestry, Inc. (NYSE: TPR), a house of iconic accessories and lifestyle brands consisting of Coach, Kate Spade, and Stuart Weitzman, today reported results for the fiscal second quarter ended December 28, 2024.<\/p>\nThis press release features multimedia. View the full release here: https:\/\/www.businesswire.com\/news\/home\/20250206225473\/en\/<\/a><\/p>\n
![\"(Photo:](\"https:\/\/mms.businesswire.com\/media\/20250206225473\/en\/2374380\/4\/Coach.jpg\")
<\/p>\n(Photo: Business Wire<\/p>\n<\/div>\n
\n\u201cOur strong second quarter outperformance is a testament to our exceptional teams and our collective commitment to disciplined brand building,\u201d said Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc. \u201cDuring the important holiday season, we meaningfully advanced our growth agenda, bringing innovation and craftsmanship to consumers around the world. Our success is clearly reflected in the accelerated top and bottom-line gains we achieved, resulting in record quarterly revenue and adjusted earnings per share. Further, we raised our outlook for the year, harnessing our position of strength to deliver superior results, while making strategic investments to extend our competitive advantages and power durable growth. We remain confident in Tapestry\u2019s bright future and the compelling opportunity for continued, significant value creation.\u201d<\/p>\n
Tapestry, Inc. Strategic & Financial Highlights<\/span><\/b><\/p>\n
\nThe Company advanced its strategic priorities throughout the quarter, resulting in accelerated revenue and adjusted EPS growth, and significant cash flow generation against a complex global economic and consumer environment. Highlights included:<\/p>\n
Build Lasting Customer Relationships<\/i><\/b><\/p>\n
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- Drove new customer acquisition growth, <\/b>welcoming approximately 2.7 million new customers to our brands in North America alone, of which over half were Gen Z and Millennials.\n<\/li>\n<\/ul>\n
Power Global Growth<\/i><\/b><\/p>\n
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- Delivered revenue growth of 5% above prior year, exceeding the Company\u2019s outlook across all regions<\/b>, highlighted by constant currency gains in Europe (+42%), North America (+4%), and total APAC (+1%); fueled 10% growth at Coach <\/b>at increasing margins and profitability, reflecting the vibrancy of the brand;\n<\/li>\n
- Drove adjusted earnings per diluted share growth of over 20%, more than $0.30 ahead of the Company\u2019s outlook<\/b>, driven by operational outperformance (+$0.17), a net tailwind from share repurchase activity (+$0.08), as well as a benefit from a favorable tax rate (+$0.08) versus plan;\n<\/li>\n
- Generated strong cash flow from operating activities <\/b>of over $500 million and adjusted free cash flow<\/b> of approximately $890 million.\n<\/li>\n<\/ul>\n
Deliver Compelling Omni-Channel Experiences<\/i><\/b><\/p>\n
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- Provided unique and seamless omni-channel experiences, with a focus on driving brand desire, consumer connections, and cultural relevance<\/b>, powered by a blend of creativity and Tapestry\u2019s data and analytics capabilities;\n<\/li>\n
- Achieved<\/b>direct-to-consumer sales growth of 4%<\/b>, which included a high-single digit increase in Digital revenue and a low-single digit increase in global brick and mortar sales at strong and increasing profitability across channels.\n<\/li>\n<\/ul>\n
Fuel Fashion Innovation and Product Excellence<\/i><\/b><\/p>\n
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- Delivered compelling innovation to consumers<\/b>, highlighted by Coach, which drove strong handbag revenue growth and AUR gains fueled by broad-based traction across the leathergoods offering;\n<\/li>\n
- Remained disciplined brand-builders and operators, underscored by significant gross margin expansion of 280 basis points<\/b>, which included operational outperformance (+260 basis points) and lower freight expense (+20 basis points);\n<\/li>\n
- Leveraged Tapestry\u2019s agile supply chain to deliver craftsmanship and value globally, <\/b>supporting the Company\u2019s accelerated growth.\n<\/li>\n<\/ul>\n
Shareholder Return Programs<\/span><\/b><\/p>\n
\nGiven Tapestry\u2019s strong operational results, robust balance sheet, significant free cash flow generation, and outlook for growth, the Company expects to return more than $2 billion or over 100 percent of its free cash flow in Fiscal 2025 to shareholders through dividends and share repurchases:<\/p>\n
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- Dividend<\/b>: The Company\u2019s Board of Directors declared a quarterly cash dividend of $0.35 per common share payable on March 24, 2025 to shareholders of record as of the close of business on March 6, 2025. In Fiscal 2025, as previously announced, Tapestry expects to maintain its annual dividend rate of $1.40 per common share.\n<\/li>\n
- Share Repurchases<\/b>: As previously announced, during the quarter the Company executed a $2 billion Accelerated Share Repurchase program (\u2018ASR\u2019). Tapestry received an initial delivery of 28.4 million shares of common stock on November 26, 2024 under the ASR program. The total number of shares purchased by Tapestry will be based on the volume-weighted average price of Tapestry common stock on specified dates during the term of each ASR agreement, less a discount, and subject to adjustments pursuant to the terms and conditions of the ASR agreements. In addition to the ASR program, the Company has $800 million remaining under its previous share repurchase authorization.\n<\/li>\n<\/ul>\n
Overview of Fiscal 2025 Second Quarter Financial Results<\/span><\/b><\/p>\n
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- Net sales <\/b>totaled $2.20 billion, representing 5% growth versus prior year on both a reported and constant currency basis. FX represented a 30-basis point headwind in the quarter due to the appreciation of the U.S. Dollar.\n<\/li>\n
- Gross profit<\/b> totaled $1.63 billion, while gross margin was 74.4%, driven by operational improvements of 260 basis points, as well as a benefit of 20 basis points from lower freight expense. This compared to prior year gross profit of $1.49 billion, representing a gross margin of 71.6%.\n<\/li>\n
- SG&A expenses<\/b> totaled $1.14 billion and represented 51.9% of sales on a reported basis. On a non-GAAP basis, SG&A expenses totaled $1.08 billion and represented 49.4% of sales. In the prior year period, SG&A expenses totaled $1.05 billion and represented 50.2% of sales on a reported basis and totaled $1.02 billion and represented 48.7% of sales on a non-GAAP basis.\n<\/li>\n
- Operating income<\/b> was $493 million on a reported basis, while operating margin was 22.4%. On a non-GAAP basis, operating income was $548 million, while operating margin was 24.9%. This compares to reported operating income of $448 million and a 21.5% operating margin and non-GAAP operating income of $476 million and a 22.8% operating margin in the prior year period.\n<\/li>\n
- Loss on extinguishment of debt <\/b>was $120 million on a reported basis, primarily reflecting the redemption of the acquisition-related debt following the termination of the merger agreement with Capri Holdings Limited, and $1 million on a non-GAAP basis. There were no debt extinguishment costs in the prior year period.\n<\/li>\n
- Net interest expense <\/b>was $25 million on a reported basis and $2 million on a non-GAAP basis. This compared to net interest expense in the prior year of $49 million on a reported basis and $5 million on a non-GAAP basis.\n<\/li>\n
- Other expense <\/b>was $3 million compared to other income of $5 million in the prior year period.\n<\/li>\n
- Net income <\/b>was $310 million, with earnings per diluted share of $1.38. On a non-GAAP basis, net income was $450 million, with earnings per diluted share of $2.00. In the prior year period, net income was $322 million, with earnings per diluted share of $1.39. On a non-GAAP basis, net income in the prior year was $377 million, with earnings per diluted share of $1.63. The tax rate for the quarter was 10.1% on a reported basis and 17.1% on a non-GAAP basis. In the prior year period, the tax rate was 20.0% on a reported basis and 20.8% on a non-GAAP basis.\n<\/li>\n<\/ul>\n
Summary of Revenue Information (Unaudited) \u2013 in USD millions<\/span><\/b><\/p>\n
- Gross profit<\/b> totaled $1.63 billion, while gross margin was 74.4%, driven by operational improvements of 260 basis points, as well as a benefit of 20 basis points from lower freight expense. This compared to prior year gross profit of $1.49 billion, representing a gross margin of 71.6%.\n<\/li>\n
- Share Repurchases<\/b>: As previously announced, during the quarter the Company executed a $2 billion Accelerated Share Repurchase program (\u2018ASR\u2019). Tapestry received an initial delivery of 28.4 million shares of common stock on November 26, 2024 under the ASR program. The total number of shares purchased by Tapestry will be based on the volume-weighted average price of Tapestry common stock on specified dates during the term of each ASR agreement, less a discount, and subject to adjustments pursuant to the terms and conditions of the ASR agreements. In addition to the ASR program, the Company has $800 million remaining under its previous share repurchase authorization.\n<\/li>\n<\/ul>\n
- Remained disciplined brand-builders and operators, underscored by significant gross margin expansion of 280 basis points<\/b>, which included operational outperformance (+260 basis points) and lower freight expense (+20 basis points);\n<\/li>\n
- Achieved<\/b>direct-to-consumer sales growth of 4%<\/b>, which included a high-single digit increase in Digital revenue and a low-single digit increase in global brick and mortar sales at strong and increasing profitability across channels.\n<\/li>\n<\/ul>\n
- Drove adjusted earnings per diluted share growth of over 20%, more than $0.30 ahead of the Company\u2019s outlook<\/b>, driven by operational outperformance (+$0.17), a net tailwind from share repurchase activity (+$0.08), as well as a benefit from a favorable tax rate (+$0.08) versus plan;\n<\/li>\n
- Delivered revenue growth of 5% above prior year, exceeding the Company\u2019s outlook across all regions<\/b>, highlighted by constant currency gains in Europe (+42%), North America (+4%), and total APAC (+1%); fueled 10% growth at Coach <\/b>at increasing margins and profitability, reflecting the vibrancy of the brand;\n<\/li>\n
- Drove 280 Basis Points of Gross Margin Expansion Versus Prior Year<\/b><\/li>\n